Dr Reza Salim and Dr Tracey Helen are economic research fellows. Both are interested in understanding how an economy grows over time. support Endogenous Growth Theory in that they agreed on the importance of human capital in achieving the steady state economic growth rate. However, like other economists, they have distinctive views on the finer details of how an economy should develop its human capital.

Question 1

Dr Helen stated that the economic growth of a country is a gradual process that involves several stages of development? However, Dr Salim argued that economic growth requires a structural measure that involves a country moving from the traditional to the industrial sector. Which view do you think is more accurate and why? Explain.

(8 marks)

Question 2

Recently, Dr Helen mentioned in the media that the best way to increase the standard of living is to reduce the population growth rate. Would you agree with Dr Helen? Explain.

(8 marks)

Question 3

Dr Salim stated in the media that a country's economy is unlikely to grow forever. Do you agree with Dr Salim? Provide reasons in favour of your argument.

(8 marks)

Question 4

Dr Salim recommended that a country should devote more time to human capital accumulation to increase the economy's growth rate. If a country follows Dr Salim's argument and invests more time in human capital accumulation, what will happen in terms of the economy's current and future levels of consumption? Discuss.

(8 marks)

Question 5

Dr Salim argued that technological improvement is indispensable to increase total factor productivity. If you support Dr Salim, what steps would you recommend a country to take to boost technological progress? Discuss.

(8 marks)